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A wonderful little storm is brewing in the UK property market. For according to a statement issued by the tax authorities (HMRC), significant improvements in database technology have recently made it possible for its officers to ‘interrogate’ the Land Registry’s records and identify thousands of holiday home owners and buy-to-let landlords who may have ‘inadvertently’ forgotten to pay capital gains tax.
It is being seen by many as the latest in a series of measures to address fast dwindling revenues, a situation which has been exacerbated by the recession and growing unemployment. HMRC is also in the process of investigating second-home owners who have incorrectly offset the maintenance costs of their properties against CGT, when under current legislation, this is only permissible for ‘enhancements’.
And then of course there are those taxpayers who have bought and sold properties over a relatively short period of time, and are thus deemed to be property developers by profession and accordingly subject not only to CGT but to income tax and national insurance.
If HMRC’s interest in Land Registry records is anything to go by, they might well soon be busy studying videotapes of all those greed-fueled ‘amateur’ developer television programmes so popular at the height of the property boom. Tantamount to filmed confessions half of them; much talk of ‘amazing profits’ but very little mention of capital gains tax if my memory serves me correctly.
But the real irony here, and the main reason controversy is so likely, is that this whole operation has been openly supported by the House of Commons, an institution whose members’ tax and expense fiddling activities have recently been painstakingly exposed in all their lurid glory by the country’s media. In short, the headmaster has been caught with his head buried deep in the cookie jar and yet is still insisting on punishing a handful of errant schoolboys for daring to gobble up crumbs from the floor around his feet.
It may not be the stuff of revolution and guillotines, but I for one am looking forward to hearing the Government’s opening address when HMRC takes its first case to the courts. As they say, watch this space.
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